No, Telstra. System outage is about reputation, not technology

You know you’re in trouble when the news media start compiling lists of your failures, and the list gets rolled out and updated with every subsequent issue.

That’s the problem facing Telstra as the supposedly premium telecoms supplier in Australia.  And what’s even more damaging to reputation is not just their repeated system outages but their inadequate communication to hundreds of thousands of angry customers.

In February Telstra suffered a massive outage – reportedly caused by “an embarrassing human error” – followed by two further failures in March which affected up to 8 million customers. CEO Andrew Penn offered users a ‘free data day’ and said: “As CEO I take full responsibility … and I regret the impact on our customers and the fact that we let them down.” It was pretty much a textbook apology, accompanied by a commitment to review the system.

But when the network went down again in mid-May, affecting 10% of the company’s internet customers, the CEO was noticeably quiet. Perhaps it was because the latest failure happened just one day after he boasted at a function that a review of the network showed its “incredible strength and resilience,” and how they were committed to meet, if not exceed, customer expectations.

After the new outage, instead of more public assurances from the embattled CEO, customers saw anonymous messages on the Telstra website – under the unhelpful heading Unplanned Service Disruption – which twice reported the system had been restored, and twice had to admit it wasn’t true. Doubtless Mr Penn was very busy, but it took four days before he returned to social media and tweeted; “pls know I’m reading all your comments and our team is on it.” It’s hard to imagine how anyone thought that message from the CEO would improve the situation.

In fact a whole week was allowed to pass before Telstra finally wheeled out their Chief Operating Officer, Kate McKenzie, to offer an executive apology and to concede that, despite earlier assurances, several thousand customers were still offline.

Predictably there was a technical explanation for the prolonged outage and the premature claims of success. But this was not fundamentally a technological crisis. Any complex system is always going to have outages, but how you communicate about it is what makes the difference.  Reputational damage doesn’t just add up, it multiplies. When your company is repeatedly under fire – and the news media are compiling lists – every fresh problem starts to gain a cumulative importance that it doesn’t necessarily deserve.

That’s the situation Telstra is now in, and it needed a lot more than a confident CEO who took the limelight, then seemingly left it to someone else to face the media. The role of the CEO in any crisis is critical, especially the question of when to use the CEO and when to use someone else. Telstra’s latest experiences surely provide a lesson for how to manage that important decision.

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About managingoutcomes

Issue and crisis management expert
This entry was posted in Issue Management, Reputation risk and tagged , , , . Bookmark the permalink.

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